tv The News Hour With Jim Lehrer PBS November 2, 2009 7:00pm-8:00pm EST
captioning sponsored by macneil/lehrer producons >> ifill: od evening, i'm gwen ifill. on the nshour this monday, our lead story: afghan president karzai is deared the winner as the runoff election is cancelled. maaret warner reports from kabul. then, after the other newsf the day, judy odruff has anotheelection tale. is one, in upstate new york where republicans ve split over theutcome of a congssional race.
>> ty may not have any room for moderate views in republic party utate anymore, but l me assure you weave room. >> we accept moderates in our party. we want moderates in our part >> ifill: after a year o financial crisespaul solman findout how little we've learned. >> more money has been los because of the fr words that sounded different than at the poinof a gun. >> ifill: mmercial lender cit files for bankruptcy and t taxpayer pays thprice. and jeffrebrown has the latest chapter in the story of bos major funding for the newsur with jim lehreis provided by: >> what thworld needs now is energy. the ener to get the economy humming ain. the energy to tack challenges like climate change. what is that energcame from an
and by thelfred p. sloan fodation. supporti science, technology, and improved economi performancand financial liracy in the 21st century. and with the ongoingupport of these stitutions and fodations. and... this program wasade possible by t corporation for blic broadcasting. and by contributio to your pbs statn from viewers like you. thank you. >> ifill: e presidential eltion fight in afghanistan cameo a sudden end today. election autrities cancelled plans r a runoff and awarded present hamid karzai another term margaret warner is in kabu and has our leadtory. >> warner: it was e culmination of a week's long presidentialampaign drama, when lattoday the chief of afghanistan's election commission declare predent hamid sar zi the winner.
>> w declare at mr. hid karzai, who got the majority votes in the fit round and is the only candidate in the send round ofelections for afghanistan in009, we declare elected preside of ahanistan. >> warner: the decision to cancelext surday's heduled run-off came after a weekend of politica brinksnship. at stake was the final outcome of an august 20 election so marked by ballot box stuffing and other fraud tt more than one milln of karzai's vot had been thrown out, forcing a send round. today's abpt cancellation was trigged by karzasrun- off rival, former foren minister abdullah abdullah. yesterday he convened more than ahousand of h supporters and wh, emotion choking his ice, withdrew. since karzai hadn't agreed to any of the changes abdullah
had demanded, iluding the fing of top election officials he held responsibl for the frd, abdullah said he saw no point riskg more lives and spending mre money on a second votingay. despite their disappoiment, abduah spporters said it wathe right decisio ranslated:) the decision announced today means that the nation w't go to the polls. mr. karzai wilbe alone. he has ruled overhe people but hs already.... >> warner: but oers pricted some of abdullah's supporte wouldn't react so calmly. >> (translated. ) whatever legalhing we n do. therwill be violence from the normal peopl of afghanistan. >> warner: a short time later in thewalled cotyard of his home abdullah calledor calm and specifically asked his supporter not to demonstrate. >> i didt with alot of pain. but at the same timeith a lot of hop towas the future.
>> warner:ut aullah vowed to sy involvedin the nation's affairs. he pointedly decled to say he thought a second-term karzai was aredible parer for e u.s. and its allies. >> the united states and the internationacommunity based on the expernce they've had in t past few years to make that judgment. but the is no doubt that the international mmunity, to make success, to turn this into a success, they do ned credible and reliab partners. >> warner: abdullah deed making any last-minute deal with kari. but he said another player in the election drama, the taliban, which wagedttacks on voters and electn worker alike,ad influeed h chce. >> when i made that decision security was not t sole reason. that was a reason. lives are involved in this. lives arnot just devoted but those who are providing security for us.
>> warner: last night scott wharto whose u.n.-affiliad electoral complaints commission, rang t bell on the fraud in the fir round said there was no road mapto deteine the xt step. >> the electorallaw is not enrely clear on how handle a withdrawal in the second round. >> warner: so the cotitution and e election laws carefully written ashey were dinot anticipate this? >> idid not. the i.e.c. is responsible for writing regutions that determine all the small details of the electio there are no regations that they've issued sofar that uld control actly how to proceed unde this circumstance. >> warner: at midday tod, we caht up with the head of the afghan ection commission at the group's hdquarters in eastern kabul. th man said his members were consulting internationa legal experts decide what to d he responded hly to abdullah charges that he had acted with bias toward karzai.
>>e have to give proof of that. without any proof, you know, he cannot say that. thats wrong. >> warner: bute didoncede that no substtial changes d been made in the electio process since the firsround. it wasn'terfect, he said, but there was much to ild on. >> this is a victory for the afghan people. an every election there are some problems. you know,ou have it in the united states since 200 years of the democcy. but you saw that in 2000 with bush and agore. what happens over here until we g this experience,it will take a longime (laughing) you know. >> warner: unitedations has been helping shepherd tat learning pross. today secrety general ban-ki moon made a surprise visit to
kabul. he met with both kari and abdullah. then he told reporters he hoped the i.e.c. would make a decision soon. >>t isp to the afghan vernment and partilarly the independent election commission to decide what urse of action it will take. >> we deare hamid karzai. >> wner: ls than a hour later we watched the decision come in li on afghan's polar tv with its owner tv and radio baron. his stationfferedall-to-wall campaign coverage. >> it would have bn a very coroversial cision to go ead with the second round given e risks. and would pele turn out to vote for one candidate? they probably did the wise thing ana relief to all. >>arner: but he said the two months of doubt and the explosion yore of rampant fraud had left many afghans disillusioned. >> the process itself, you know, in the eyes of most
afghans h been damaged. people stuffing ballot boxes, peopleilling out for one after the other, it really shook up this untry. >> warner: he hopes karzai will now rch out to abdullah and bring into theold. but whether karzai afte e k-ing out a victory amid so muchitterness fee a need too so remains t be seen. >> ifill: in washiton this afternoopresident obama said he telephoned karzai to ofr his congratulaons. >> ahough the process was messy, i'm pleaseto say that e final outcome was determined in acordance with ghan law. >> ifill: mr. oba said he also to the afghan leader he now expects serious effos to rein in corption and govern the country effectively. >> after some difficult years
in which thekms been some drift that, infact, he's gointo move boldly and forcefullyorward and take advantage of the international community's interest inis cotry to initiateeforms internally. that has tbe one ofur hight priorities. he assured me that he understood the importance of th moment, but as i indicated to him th proof won't be in wos. will be in deeds. >> ill: the president did not say when he would dede on sending mo american troops. instead, white house pss secretary robe gibbs repeated will happen "in the coming weeks". now, back to margaret warnern kabul. i spoke with her earlier. marget warner, it's good to see you. it's been quite a dramatic weekend. how did the election fall art or was ts collapse inevitable? >> warner: gwen, abdullah abdullah ever since the send rod had been declared o weeks ago hadnsisted there
had tobe these changes as i reported. in the electn process. or else you wod he the same situaon rife for fraud as occurred in theirst und. m told that the final mome in his decision reall came saturday night when he and karzai met under the auspices of the head of t u.n. miion here. and abdullah once more made hicase. you know, you have to fire the head of this commissn. we've got to close some these polling stations where eryone is afraid to go. an karzai showed absotely no interest. and at thatoint and duma recognized there waso way he would win. you'd have aomplete repeat of the fit round. and a lot of lives would be at risk. so he athat point decided to takehe, quote, high road and withdraw. so it still remained upin the air what manne he would withdraw, whether it wouldbe gracious or with fighting words. >> ill: was itignificant that abdullah,even after opping out and taking the highoad, as you described it,
th he would not endorse karz as legitimate? >> warner: oh, y. i mean, on the one hand h didn't call fo a boyco which some of hisupporters had bee busyly telling reporters that that's what he would do which would have been fighting words. but as we tried over and er again at ts press conferenc to get him to say that he suppord president karzai, he wished him wl. he helpedhim gove. but he absoluty refused to. now that's read one of two ways. either adullah does not want to iany way. i mean he want karzai to just have to govern on hi own and perhaps fail on his ow or thether is that abdlah stilis hoping for some sort of a role. by withholding endorsement and support, he still keeps alive that prospect. the third prospect is, of course, that he could now turn arnd and challenge what t electionommission, the i.e.c., did toy. and one of hi spokesmen, though he has a cuple of them, told the wires toght that he
thought the desion had no legal basis anthat abdullah would ma clr his intentions tomorrow. soo some degree phaps the drama continues. >> ifill: it sounds lke between these two men there s never serious discussion about power sharing as had been discuss. >> rner: that is very hard to pin down. i trd all day to that down. karz's people say that on it becam clearbdullah was number two th these negotiations did begin. and that abllah wanted slice of the pie. x-numb of governorsps, x- number of minisrs. abdullah's pple say, no, was looking for somethg more high minded. he wanted karzaito agree to constitutional refor the major one ing to change ghanistan's system to a parliamenty one where political anethnic mirities would at least have some role in government. right noit's winner take all. whoever wins the psidency, who is usuall a member of the pashtun group, gets to appoint not on his own cabinet and supreme court bu also the
governors. it totally winner take l. that said by the las feways i'm told there were not rious power-sharing talks going on. it really was a discussion between th about whether to even change th election procedures. as of:00 today i'm tol they stilweren't having any discussion so that was before the i.e.c. decision. abdullah yesterday sd in the press conferen at oneoint he said, well, we both live in this country. you knowin afghanistan we men ca fight and then talk. so i thi the door remains open if karzaiants to walk through. >> ifi: what about the uned nations? >> wner: the u.n. publicly only spoke before the decision. as i reportein my pece. urging the i.c. to make it quickland saying that i suort whomever or whater the outcome s. but privately th feel huge relief. as youl recall, five of their people were kild last nit. i mean last week in an assau on a guest house.
the taliba had vowedore election violenc one n. official said to me, you kn, we were always prepared to try to make a go of this secondound. but for what? when we know that either it would be around h a roundhat was just tainted a the first or certainly once abdullah had whdrawn to do that for a one-man race, the cost in lives and money couldn't beustified. the u.n. is tremendously relieved though they d't say so pubcly. >> ifill: whatoesarzai do now? is there any clear path for him? >> warner: i mean, ere are a cole of paths. i mean,ne is he c say i won and i'm going forward. ju the way i always did. the other is that he broadens his base. there are many even suorters that we've talked to who do regnize that his credibility s undermid, first o all, by the last three or fo years ere corruption has gotten worse his vernment is accused of not divering basic services. the taliban has gotten
stronger. then this massi fraud which stunned just about evebody. and th problems ar soig that he has to take on from the rruption or to some the warlords inhis own coalitn that he can't possly do it hving won less than 50% othe vote unless he broans his base. abdullah has emerged even thoughhere are no real political parties here yet abllah has emerged as a rce to be reckoned with. e of his suorters at that meeting yesterday saidwe now have 100 seats in parliament. so it just remains to b seen whether karzai sees it that way or whether he's now so bier that he refuses to reach out. the nal unknown al is whetr the u.s. will really push him to and whether he would respond to that. a person closeo karzai told me and others he said this, at karzai againecame very bitterbout the international community, tught they really nted him to lose. it's unclear whether he
wod now be responsive the obama adnistration ying, you know, onof the cnges you ve to make is broen yourase. >> ifill: thank yo,margaret, joining us tonightrom kabul afghanisn. >> warner: my pasure, gwen. >> ifill: in other news day, at least 35 ople were killed in a suicide bombi in pakistan. it happenein the city of rawalpindi, near the pakista army's headquarts. the explosion target military personl and civilians. zens of people were wounded. hours later to the et, a suicide car mb went off in lahore, woding seven police officers at a checkpoint. secretary of state hillary clinton drew stroncriticism from ab states today. they acced her of giving in to iseli moves, to expand jewish ttlements in palestinian areas. on saturday, in jesalem, clinton prsed an israeli offer
to curb the cotruction, but not to impose outright eeze. today during a stop in marrakech, moroc clinton respond to arab leaders who accusethe us of softening its position. >> this ofr falls far short of what we would characterize as our positn or wh our preference wld be. but if it is acted upon, it will be an unprecented restriion on settlemts and would have a significant and meaningful effec on restraing their growth. >> ifill: clinton al extended her ovseas trip by one more day to fly to egypt. she will meet wi president hosni barak, in part to ease concerns over u.s. policon the israeli selements. rd motor company posted a prof of nearly a billion dollars for the ar's third quarte it was l by the company's domestic operations. they showed a ofit for the firstime since 2005. ford washe only major detroit automaker that didn't ta federal rescue fds.
on wl street today, the ford announcement helped th company's stock a small advance. and on theroader market, thdow jones industrial average gained 76 points tclose at 9789. thnasdaq rose four points to close at 2049. two deaths are now linked to ground beef, continated with e-co bacteria. the centers for diseascontrol ported today at least 16 other people have be hospitalized. over the weeke, fairbank farms new york state recalled the meat. it was distribed in september to at least ght states on the east coast. the daily commutgot a lot easi for drivers in northern california today athe bay bridge bween san francisco and oakland reopened. a lice escort led the first wave of traffic acro the span. safety eineers hadrdered it shut down last tuesday aer suppt rods failed, sending 5,000 pounds of metal on the highway duri evening rush ho.
the 6-day closurwas longer thanxpected but state officials said the bdge has now pass with "flying colors." the navy newest assault ship sailed into w york city today as a kind of sea-gng memoria to the 9/11 attas. the uss "new york" w built part with seven and a-half tons of steesalvaged from the world trade center site. crowds lined the sre near ground zo as the ship paused for a 21-gun salute. the vessel will befficially commisoned on saturday. >>fill: and still to come on the nehour tonight: financial ssons not learned, a taxpayer-financed bankrupt and the story ofhe book. but it's election y tomorrow and a few key coests could end upaying a lot. ju woodruff has the story. >> woodruff:ntil recently, the main focus othe handful of
2009 so-called off year eltions has been on the gubernatorial races in n jers and virginia. the new rsey contest is a three-way batt between the incumbent democr jon corzine, republican chris christie,nd independenchristopher daggett. the last polls show corzine and christie running almt even, with dagtt trailing well hind. >> hello, nejersey! cheers and applause >> woodruff: in a sign of th contest's national importae, president obammade his third tr to new jersey this weekend on behalf of corzi. >> your voicwill get jon corzine ur more years as vernor of new jersey. >> woodruff: in rginia, meanwhil republican bob donnell threatens to take th governorship awafrom the democrat most polls therehow him with a
dole-digit advantage over creigh deeds. but at the 11thour, a third contest has tapulted to the ont of the political scene. republic dede scozzafava's surprise satury withdrawal fromhe race for new york's 23rd congressional distrt, put the otlight on the rift between the modera and consertive factions of the republic party. that divide became a the more apparent yesterdayhen scozzafava, a morate who supports abortion rights a same-sex marriag endorsed her decratic opponent, bill owens, instead of fellow publican doug hoffman, o is running as the conservative par candidate. at a campaign rally over the weekend, hoffm said what was haening in the new york 23rd was the repuican party coming back to life. >> think that what you're seeing here toda is the rerth of getting the republican back to wre we were and getting a new type of
republican going forward thais going to rebuild the party and make the party verstrong in the fure. >> woodruff: still, naonal republican leaders sd that scozzafava's decision to bowut shld not be seen by moderates as a sign that they are longer welcome ithe party. >> we cept moderates in our party and we want moderas in our party. weover a wide range of americans. >> woodruff:ut amy walter, edor of the national journal's "hotline", says naonal republicans re divided. >> the were elements of the republican party that deded we would rather have no replican than have republican that was pro gay marriage and pro choe d pro stimulus and supportiv of a lot of bor issues. th, to us, is not a win, said these conservative there are other, there a the political sttegists, republic political strategists say to you a win is a win is
win, doesn't mter whether it comes in the pkage of doug hoffn or dede scozzafava. >> woodruff: democrats mnwhile have looketo capitalize on the situation, charging the republican party is o closely weddedo its conservative base. vice president joe bid hit on actly that point this morning at a campaign rallwith democratic cdidate bill owens. >> they de it clear up here that they would not accommate any differenviews. ey made it clear they would not accept any ran of views, even whin their own party. you know, they mayot have any roomor moderate views in the republican party upste anymore,ut let me assure you, we he room, we have room. ( applause) >> wdruff: for his part, owens too struck a bipartin tone. >> i'm goi to work with mocrats, republicans and independents to nd common grou and push for solutions to adess the challenges that we fa, with the best interest of upstate neyork in mind, always >> woodruf going forward, amy
walter says this race coulbe a test for botparties in next ar's elections. for e gop, of how much of a liability its internalivisions really a. >> for the republican pay, here is the qution: we have ve low approval ratings, very high disapproval rings. now we have the national fus on the fact th they seem divideinternally on where they should go next. but if they still win this st with all thosehings going against them, suggts that national numbers don't mter as much wn it comes down to the actual vote. >> woodruff: and, she says, testor the democrats too: >>fill: our patchwork nation page has more about at the new york contest mightean for republicans. find a guide to th and other off-ye races on our website newshour.pbs.org.
next, a conversation abouthe financial medown -- and whether it's really any different from cris of the past. it's part of economics correspondent paul sman's "making see of financial news". >> we've eerienced significant turmoiin our financial markets >> its been one ar since the onseof the financial crisis. >> stocks all aroundhe world are tankg because of the isis on wall street. >> one of e biggest financial failures in us history. >> a near total coapse of the finaial system. >> reporter: so, a world economy in unprecented peril? no, says harvard enomist ken rogoffmore like "crisis as usual." the u.s. economy is drivingñ down theracks of a typical deep post-war financial cris. >> reporter: ia new book, this time is different, rogf and
co-author rmen reinhart document the long history of financial crises. and we do mean lon you've looked financial crisescross virtually every continent r something like 800 years. is there just something the nature of hun beings that we through these cycles? >> the's no doubt about it. i mean the recurng theme is arronce and ignorance. ignorae that this has happened before iother places, in other countries and arrogance thking we're specl, this time is fferent, we have financial globalization, were nning our econombetter. they'rlending us a lot of money because ey love us and we doing a good job, that's what officials think >> reporter: co-auth carmen reinhart. >> that whateverhe rules of the me are they just simply don't apply us and that is e essence of the arrogance that dominat the boom phase and it is the seeds ofhe cris are sown during the boom. >> reporr: as rogoff and inhart worked on their book 2007they began to see the
tell-tale gns of crisis for america the profligate. >> hsing prices rising were very typical if you're abouto have a financial crisis, the equity price re, the borrowing from abroad, and the ft the economy was slowing downall the red ligh were blinking. they say they did y to warn a convtion of ecomists in a papethey gave in january, 2008. but you didn say to your colleagu: sell! sell! sell! >> no. we didt say, sell! sell! sell! but our paper said tt the united states wi be lucky not to have deep financial crisis. >> you know we're not seers,ut it allowed us say if history any guide were lucky if tha doesn't happen he and now. >> reporter: lucky we were n. whicwould have come as no surprise to the data. >> when you have a bignflow of foreign nds and we had a ssive one, you're at risk.
when you deregulate ur markets rapidly, which we diin the states, that's also-very often happenthat you have a deep crisis. the real killer short term debt, debt that has toe refinanc all the time, well that's what the subprime w, you had to refance it. >> and tse debt buildups often end in tearscredit is ample during the feasthase we also see at availability of credit manifests itself in set price booms. so what happens is when the ings good, interest rates lo you look good,ou don't worry, nfidence is high but then suddenly confidce can evaporate, somhing happens in the world; sometng happens to you and om! >> reporter: so then, is time wasn't different, not differt from t asian currency crisis of the '90s, the lat american
de crisis of the '80s, the wall st.anic of 1907, the german crash of 1873, france's misssippi bubble of 1720, florence's banking crisiof 1340, for thatatter. and even when you justook at more recencrises those after world r ii, ours, so far, is just average. >> so for example the avage fall in stock ices from peak torough in a financial crisi like this is 56% real terms. at's how much the s&p fell. housing prices, the typical ll is 35%, we've llen by the case-shier index just over 32%. >> reporter: so yomean spain, japan, sweden, wn you average out what happened duri their severe downturns, we're ght on track? >> were right the average, ablutely. in fact yocan throw in countries like argenti, brazil, the asian isis countries and they're t very different ther. >> reporter: and, so far, it
turns out, the recovery o is typical. housing prices, for inance. >>hey tend to collapse and stay down for a long te. >> reporter: and the sck market? >> well believe it or no it goes back tohere it was, after 2-3 years. >> reporter: and unemplment? >> unemploent lingers. it goes on almost fiveears from the beginning with unemployment rising. >> it takes a litt under two years to go from peak to btom which is rouly where we are ght now. but it takes abo another two years on average tget back to your income level bere the crisis. >> reporter: so, will wee out of the woods come the ll of 2011? or is th unfortunately named season an ill omen? financial crises eventually can morph into a dt crisis. debt explodes, government de, it almost doubles with three years. >>eporter: on average. >> on average. >> reporter: does th then raise the ssibility of yet another crisis which is governments ev ours, not being
le to pay off their debts? >> well, we can handle iif were wling to tax ourselves and that's an open questn. its problem for the world because althe governments are doing that, they're all trng to borrow. ght now its okay but as thin normalize its gog to get expensiv so the defaults, the actua governments sayi: were not going to pay; it might n happen in the united stes, it might be off ithe ukraine, or it mighte in eastern europe. >> reporter: ireland. >> could be in irela. a cotry like ireland. >> reporter: or state like califoia. hey, pennsylnia defaulted on s debts. granted, iwas back in 1842, but it didn't repay its bondholders before onef them, the nature-nurturing lakpoet willm wordsworth, immortalized pennlvania's "dishonour black," a once-gat state whose "hh repute, with bounteous nature's aid, won confence, now ruthlely betrayed." look, says rogoff, hisry is littered wh post-boom deadats. >> spain hasefaulted on its bt 13 times.
frce almost as much. people s: what!? spai france? >> reporter: yet when goff and reinhartublished a paper on global defaults.... >> we ceived letters from officials from all over th world saying: weever defaulted! r country never defaulted! i mean japan wrote to usa very high japese official saying: please correct this, we dinot default in 12. and we finallynded up sending them back a bold headlinfrom the "new york time: january 1942 japan deflts on its debts. d finally the official said: well, okay, but it was onlto our enemies! >> reporter: and thus e title of rogofand reinharts book. >> more money has been los because ofhe four words this time idifferent than at the point of a gun. >> these are very traumac events. th have political consequences that you can see for dades, they have profound conquences on how t economy is struured. thiss going to influence a whole genetion that's been
rough this. >> reporr: as might this data- drenched scholarly tome thatto the amazement ofts authors, has cracked the top 100 st sellers on aman.com. >>fill: ken rogoff and carme reinhardt will answeyour questions in special insider rum on our website: newshour.pbs.org >>fill: there was even more fallout from the fincial crisis tay, after century-old commercial lender,it, filed for baruptcy. itame after months of struggles to keep the compy afloat. even aft the treasury department ponied up $2.3 billion to bail the company out last december. cit has been an portant lender to small and midsize businses and theirs is e fifth biggest bankruptcy in u.s. history. michael dea merced has been coring the story for the "new york times" and he ins me now.
welcome. >> thank you, gwen >> ifill: michael, how big is this bankruptcy really? >> it'one of the biggest. in american corporate history. whateally concerned people is, as you said, the fact that so mansmall and mid-size businesses really depend on c.i.t. for its fincing. there aren't that ma companies th specialize in that sort of lending. when c.i.t. ran int trouble is summer, there were a lo of retailers a lot of restaurants, aot of nufacturers who were genuinely packed because they didn't know what they would do if c.i.t. were pushednto bankruptcy a more likely at that time bankrupy that uld have luidated the company. >> ifill: when you s small and mid-sized busesses we're not talking nessarily about the moand-pop store down the street. give uan example. >> well, one of the most table examples is actually dunkin' donuts which relies on c.t. for a lot ofts anchises. that just shows the breadth of the coanies that c.i.t. seices.
you do have the mom-and-pops, buyou do have big companies thatre relying on this specialize financing that c.i.t. provide >> ifill: when c.t. came back to the federal government for a secon effort for a loan, ey were denied. they werelearly deemed not too big to fl. how you gauge the impact of allowing aompany like c.i.t. to go bankrupt? >> well, clearly the governmenthought that companies like city group and bank of america re too big to fail beuse they said that thoseoseystemic risks for the national and the obal econy whereas with a firm like c.i.t., there are a lot of small and mid-sized businesses that pend on it but the gornment thought at the time that it cld find a solution in e private markets and that ididn't need additiol help fromhe government. it had already got the $3.3... $2.3 billion. the government saienough is enough and let' let the company's own investorsee if they'lhelp out. >> ifill: if th is the
ivate market solution the governmentas talking about, what happens to the $2.3 llion that the treasury lent to c.i.t. in the fst place? >> well, unftunately the bankruptcyill save a lot of people fro paying but not tax payers. that $2.3illion is gone because it's... it came in e form of stock, preferred stock actually, and that ually gets wiped o in bankruptcy. >>fill: if you have a c.i.t. bond holder, wh happs? do you get anything back? >> yes, you do actually. you t about 70% ofour holdings back. that mada lot of investors feel prettgood about its so- called preackaged bankruptcy. it w alstnanimously supported. and this was after the company had tried r months to persuade the investors to back thireorganization plan. >> ifill: we've beeneporting on the c.i.t., what feels like a slow spiralor a long time why was bankruptcy a gd idea
th weekend wh it wasn't a good idea, say, si months ago? >> well, there is a time element, c.i.t.'s bankptcy filing. it had about800 milln of its bonds comingue between yesterday and tomoow. and the cmpany was really hard pressed to pay those down. at this point,t had lined up thsupport that it need fr many of its credits. had gotten about5.5 billion woh of additional nancingwhich could help it out in bankruptcy whereas three months ago it d have been pushed into theourts thout a plan. that would hav meant almost ctain liquidatn. at would have been disastro for its creditors, for itsustomers who didn really have time to prare. therwere a lot of retailers that were busy lining up their holiday ders back in july. if the weren't sure if their financing source, then they would be leftdumb struck. >> iill: does leadership
change? do the people at theop change when a cpany goes througsomething like this in thisase? in this case, yes. jeff peak is the ceo. he's a former high-level execute at merrill lynch. he was actuall in li to become its next ceo several years o but he lost out. after a couple of years he endeup at c.i.t.. he tried to make it into a really big fincial player for mo of its history c.t. was pretty sleepy company. it was lending to restaurants, retailers,mom-and-pop shops. but under mr. peak, it tried to become the next merrill lynch lynch. it became something of an investment bk. it stted making sub prime los, student loans. it got caught by the financial crisis. giveall of that, mr. pk has sa that he's going to stepown by the end of the year. the compans new owners w ll be its creditors have prty much said that's what they expect. >> ifill: but its banking
business stays intact largel, doesn't it? >> yes, it does. e problem with c.i.t. was that i relied on e capital markets. it relied on issuing debt at this prary source of financing as opposed to just a regular bankinoperation. the gulators have told t company thatt needs to me to something more stable like a bank. so, yes, its bank operatio wi stay the same. in fact, t company is going to try to rely more on its bank unit for its operation to me sure that it doe't hit e sort of ca crunch. >> ifill: when we say bankruptcy here we d't mean that c.i.t. is going o of business. inact it's alread on track to comout of bankruptcy when? >> by thend of the year. it is is filin what is called are-packaged bankruptcy which case it already has a plan of reganization which is suprted byhe vast marity of its creditors. bacally it goes to cour and tells thjudge that we
already have a plan. the creditorare on board. we like to be outn about a nth to two months. they're hoping to be out by the d of the year. >> ifl: michael del merced of the "new york tim," thankso much for joini us. >> thank you, gwen. >> ifill: you can learn more about e winners and the losersn the c.i.t. bankruptcy on our website, newshour.pbs.org. >> ill: finally tonight, what is a book anyway? and ere can you get one? jerey brown looks at the changi world of publishing, selling and reading book >> reporte in the world of books these days, e stories keep cing, but not only the ones written by auors. first there'the 'how low can u go?' story. in the latest chapter, superstore walmartecently announced it will ll popular hardbas online f just $8.98,
well below the typical rail price which n reach $25 or mo. goodor consumers? ll, perhaps, but the america booksellers sociation which represents indendent stores calls itpredatory pricing", and has asked the justice department to vestigate walmart, target, and oine giant amazon one fe: independent bookstores like denver's "ttered cover" one of the largestn the country, will be driveeven further into hd times, if they can survive at all. stores like thisof course, ready face huge competition from national book chainlike barnes & noble andorders. then there's sto number two: not onlyhat we read in the old-fashioned nse of picking a certain author ogenre, but literally, 'whate read': an actual book, or an "eleconic reading device", which alls readers tohoose from thousands
titles, and stores hundreds at a time. amazon's kindle, which haseen updated and panded several times, remains the market leader. but there competion here, too, isrowing. sony's "ader" has also been updated, to support more books. and barnes andoble will soon release s new "nook", which will allow readers tbrowse and sampleooks for free. all the devices have come a long way from early prototypes. d they're catching on: according to forrester rearch, some threeillion e-readers ll be sold this year, and th numbers expected to double next year. at kramer oks, an independent bookstore in whington d.c., we und mixed reaction to the e- books: >> it's e whole experience, going to t bookstore, reading the review reading the backs of the book, being in a bookstore. and then buying the bookhaving the ok, cuddling up in bed and reading a book. >> i was hesitant use one because thought maybe i would be aware that i was lding sothing electronic the whole time, but yeah, u get lost in whatever it is your readin not what you're lding.
>> reporter: as for e store's owners, there was no ambivalence, b rather a clear rning on the front door: "no cellphones or kiles allowed!" we exploreome of this now with two careful watchers of t book business: ksia kroszer is founder and editor of booksquareom a web site thatzt focuses on the digit publishing indusy. v grossman writes about and reviews books for ime magane" and is himself a novelist. ssia, start with the latest pricing war with wal-mart and target pulling down the cost of some nebooks. what kind of impact to you see that having anwho is most affected? >> this entire war is for wal-mart t actually bui traffic for its website. they don't care abo the puishing model as mch as they care about building their customer base. it's basically come r the books, stay for theankless wateheater strategy. i'm not sure is going to work. th problem for thendustry at large is if these war take
and consers really star to see, sta to shift from their independent book seers and book seller are tellings that that's not liky to haen because their ctomer se is different, then the publisng industry needs to look at its pricing strategies and rethink how they sell books to... throught the fo change. >> brown:ou're saying it's not likelyo happen tha ople would shift from the indendent bookstores? >> we're looking maybe 10 books total that are actually impact by the so-caed pre war. it's t sarah palin book, the ephen king book. thesare books that actualy me with a pttyheavy solid built- audience. people who are going to buy the books are going to buy these books regardless. the publishers are still making t same amount of ney. the various retailersre subsidizing the difference between what we'll callhe olesale price and the price that they receive. unle theseooks track really well and buildreat word of mouth i think they might an interesting experiment. but i'm not quite sure th
they're really impacting ses in other outlets. >> brown: lev grossman, what doou see happening? do youee this as ju a little passing experime or having some real potential impact? >> well, i wouldn' characterize ito much as a passg experiment a a b of a warning shot. independent bookstores orate on fairly slim margin and their pruct line is not diverse. you hav these big stores that can affo to ke a loss on a few books. if theytart discoting books acss the board beyond this littl scrap of tenbooks, th indepdent book sellers... it's a scary scerio for them >> brown: fit thisnto the larg picture which is the evolutn of value and pricing and ofhe content and product itselfaising, you know, all the questis. how does a writer get paid? how does a publisher get paid? how does a bookstore g paid? >> the old model has a great deal of life in it y.
let's not abandon it. t parallel models are sing. self-publiing, for example, in which, you know, an author might forego conventional publishers completely, forego convention bookstores completely. take a wor document, upload to it thekindle store on amazon. ey're in business for themselv in a matter of ten minutes. that model isstill kind of gestating but it's owing real fast. itill be interesting to see where thatoes. >> brown: kassia, where are we with e books? they've the next bigthing for a fewears. has it rached a point where theye real now and starng tohange the way, change the nature of the ok business? >>eah, they arectually nally a real fce in the publishingndustry. thers still a minor percentage ofverall sales. what'soing on is that not only i the publishing indust talking about e books but media is talking abouthe
tech industry following the developmt of the readers. and the major medi, "newswk" another outlets are picking up on e books and talking about books as wl which is a kind of a different way for the media to cover this industry. ually it's the splashy stuff. there's a lot more news aut books and the e-reader,he kindle, the ok, the sony read, they're permeatinthe conser coniousness. people are more ll to go give it a try becau it's not scarynymore. it's not weird >> brown: you meanews about books as in which-reader works better or in different ways? it's a different way tan thinking aboutews of the books we used t think of it, right? >> rht because we're hearing it's about t device. it's about the retailer, amazon, barnes and nobl but it's also talking just about books. all of a sudde the idea of reading is once again' in t public cociousness. it's not necearily that this is a new wayf readi but we're talking about reading in
e media and how we can bring bookand people together. i'm t just talking about devices as mh as i'm talking about r phones and other ways of reading. >> bwn: lev, whereo you think we are witthe e-book and w it's start to go hve an impact on bothhe business and how people rd? >> wel there's sort of up sides and wn sides. it's great when ybody reads ything anywhere. e-y creates this gat new tail channel for selling books because you can buy books impulsive wherev you ar just download them wirelessly that's fantast. but they do co at a bit of a cost. for example, the e-reading experience, it'snot partularly elegant. the elegance, the beauty of a paper book hasn't really survived t transition to digital. it sounds a little technical to say also but people have not rely figured out how muchn eook should cst. amazon tendsto sell them for
$9.99 but amazon tkes a loss on each book. $9.99 it's n enough for publish ez to recoup the cost of producing a e-book. unlesshey figure out a new pricing sttegy pretty quick, either publisherare going to go or books are going to go. the two can' survive inheir present form. >>rown: not only t marketing of bks or the actual thing you holin your hand but talk out the way that... the way things are anging where books are written. whwrites them, wt they write aboubecause the internet chaes all of that as well, rht? >> yeah. very much. yoknow, the novel was bn in the 18th century in a period of ormous sort of social and financi and technological upheaveal, the develoent of new printing techniques, the evolution of a new marketace. 're seeing the sme thing happen rightow. totally new ys of distributing tt. totay new ways of buyi and selling it. i think the nol will totall
trsform as a result of it. the obvious thinis aate lot of peoplare making it... are ing read who were t being read befe. before the sort of new york establishmentublishers were the gate keepers. people a flooding aroun that gate. we're seeing voic that never used to be hrd getting line, getting read. it's wonrful. i mean i'm looking forward to this gat sort of cambrian period ofiteracy fertili and innovation. in tt respect it'seally exciting time to be reading. >> bro: kassia,o you see it tha way as well? cambrian period. i meant the same time talk about the lors as well in these change >> it's very psible that big publishers will be a loser. lev mentioned that the $99 price point can not be t. amazon andtherretailers are set ago priceoint saying these books have vue. you have topay for them they're not free. i think th's important. buwe're also seeing new
publhers coming into the mix. we've had several new publishers announced i the st year wherehey're going digital rst, pri maybe. this lows hem to lower their ovall cost and introduce new and interesting ways toell a story. the re ways we can cate to telltory and bring in new readers one of the things i didn't mentionarlier with the i-phone is we're opening up an inrnational marketplace for reers who don'tnecessarily from a bookstore or library infrastructure. all these differenways of tellinstories and bringing readers t books ispening up just more possibility because then they write more they create more. the wa creativity we ve ing on right now is incredible. >> brown: all right. story to be continue kassia kroser anev grossm, thanks very mu. >> tha you. >> ifillagain, the major velopments of the day.
the presidential election ght in afghanistan came a sudden end. the election commissio cancelled a runo, and decled president hamikarzai the winner a suicide bombing inakistan killed aleast 35 people. and ford mor company reported it made nearly $1 billion the third quarte we'll see you on-le and again hereomorrow evening. i'm en ifill. thank u and good night. major funding r the newshour wi jim lehrer is provided by: >> this is the enge that connects andant grain from the american heartland to han's st selling whole wheat, whil keeping 60 billion pnds of carb out of the atmosphere every year. sf, the engine that connects us.
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